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Legislation Department
March 19, 1999

House and Senate FY 2000 Budget Plans Move Forward: Massive Tax Cuts Instead of Investments in Social Security, Medicare and Education

The House and Senate GOP leadership are now rushing through Congress a budget blueprint for FY 2000 that calls for a radical departure from the budget plan submitted by President Clinton. Democratic leaders have attacked the GOP leadership budget for failing to protect Social Security and Medicare and instead squandering the surplus on large, new tax cuts; and for requiring billions of dollars in painful budget cuts in domestic programs that benefit working people and the needy.

The House Budget Committee has already approved its budget plan on a 22-18 party-line vote and is expected to bring the bill to the House floor for a vote on Thursday, April 1st. The Senate is expected to follow a similar timetable.

Instead of setting aside 77 percent of the surplus for Social Security and Medicare, the committee-approved budget does nothing to extend the life of Medicare and Social Security. The Clinton Budget sets aside roughly $700 billion over 15 years to save the Medicare health care program for the elderly and more than $5 trillion over the next 15 years for Social Security. In addition, the president has proposed investing some of the Social Security trust funds in the stock market through a new, independent government board in order to get higher yields. Republican leaders argue that they "lock up" the surplus for Social Security, but in reality the plan does nothing for Social Security and very little, if anything, for Medicare.

Instead of protecting the economy by making needed investments, the budget blueprint approved by the House Budget Committee siphons hundreds of billions of dollars into budget-busting tax cuts. The House and Senate budget plans call for roughly $142 billion in net tax cuts over five years and $778 billion over the next decade. These tax cuts are unnecessary and will benefit those who are the most well-off in our country.

Instead of providing targeted funding increases in key domestic programs, the budget would have a devastating impact on domestic spending programs. It maintains tight spending caps for domestic spending, but it actually increases defense spending. In an era of economic prosperity and budget surpluses, it is startling that Congress would be considering massive budget cuts to programs that serve working people and the most vulnerable in our society.

• The budget committee's plan does not extend the life of Social Security and Medicare by even one day.

• The budget plan siphons off hundreds of billions of dollars into budget-busting tax cuts instead of making necessary investments in programs such as health care, education and job training.

On Wednesday and Thursday, the Senate Health, Education, Labor and Pensions Committee held a hearing to consider S. 326, a managed care reform bill sponsored by HELP Committee Chair Sen. Jim Jeffords (R-VT). S. 326 is virtually the same as the Senate Republican leadership bill, excluding state and local government employees from the scope of coverage, and lacking mechanisms to hold health plans accountable for decisions to deny or limit treatment.

Democrats on the HELP Committee, led by Sen. Edward M. Kennedy (D-MA), proposed a series of amendments to strengthen the bill, but nearly all of the amendments were defeated in straight party-line votes. In particular, Sen. Kennedy proposed an amendment to expand coverage to include state and local government employees, but it was defeated. Sens. Paul David Wellstone (D-MN) and Kennedy were defeated in their fight to add whistleblower protections for health care workers. In the end, this deeply flawed bill was approved by the Committee without Democratic support.

The House voted, 289-141, to approve the Bipartisan Steel Recovery Act of 1999 (H.R. 975) that would reduce steel imports by about 25 percent through the use of quotas. The American steel industry is in crisis, and the jobs of more than 160,000 American workers are at risk due to illegal dumping of foreign steel products on the American market by Asian, European and South American countries in violation of our anti-dumping and trade laws.

The Bipartisan Commission on Medicare Reform was unable to reach agreement on recommendations to the Congress on how to reform the Medicare system. President Clinton immediately filled the void, announcing that the Administration would come up with their own reform proposal. Sen. John Breaux (D-LA), the author of the controversial Medicare voucher system, promised to bring his proposal to the Senate Finance Committee, of which he is a member. Families USA, a health care consumers group, released an analysis of the Breaux plan citing that beneficiaries will not get the same benefits they currently have and that their benefits will cost more.

The Senate killed an amendment to an emergency spending bill offered by Sen. Arlen Specter (R-PA) which would have required states to spend 50 percent of their tobacco settlement money on smoking reduction programs and assistance to tobacco farmers. The amendment failed by a vote of 71-29.

The House Government Reform Committee gave voice vote approval to a bill (H.R. 208) that would allow federal employees to begin contributing to the government's Thrift Savings Plan immediately after they are hired.

Census 2000

After six hours of rancorous partisan debate, the House Government Reform Committee approved seven bills that Republicans say would enhance the accuracy of the upcoming 2000 census. Democrats decried the bills, saying the measures would delay the census count and would not address the estimated 1.6 percent undercount that hampered the 1990 census.